Central Bank of Chile Reduces Key Interest Rate Again

September 12, 2014

There previously had been cuts in the overnight Chilean central bank interest rate of 25 basis points administered in October and November of 2013 plus February, March, July and August of this year.  Yesterday’s cut was also by 25 basis points and puts the benchmark now at 3.25%.  The move was expected and indeed implied in previous statements.  Today’s statement speaks of low economic dynamism and assumes “that inflation will stay above the upper bound of the tolerance range still for some months, to later return to the target.”  A policy bias toward possible further rate cuts continues but is expressed in a more hedged way than before: “The Board will consider the convenience of introducing further monetary stimulus in line with the evolution of domestic and external macroeconomic conditions and its
implications on the inflationary outlook.”

Copyright 2014, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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